Hsing Kenneth Cheng

Editorial: web services and process management: a union of convenience or a new area of research?

Two recent trends are reshaping the research landscape in business process management. One such trend is the adoption of process-driven application integration by major e-business middleware vendors, and the other is the advancement of web services as a universal computing platform. In this paper, we investigate the impact of web services on business process technologies and present our viewpoints on research directions in business process management in the presence of web services. Finally, we introduce the papers published in this Special Issue on Web Service and Process Management.

Broadband Network Management and the Net Neutrality Debate

The debate of net neutrality and the potential regulation of net neutrality may fundamentally change the dynamics of data consumption and transmission through the internet. The existing literature on economics of net neutrality focuses only on the supply side of the market, i.e., a broadband service provider (BSP) may charge content providers for priority delivery of their content to consumers. In this paper, we explore a complete spectrum of broadband network management options based on both the supply and demand sides of the market. We find that although the BSP always prefers the non-neutral network management options, it does not always discriminate both sides of the market. From the social planner’s perspective, we find that some network management options maximize the social welfare under certain market conditions while other options reduce the social welfare. Using the terminology from a recent Federal Communications Commission report and order, we categorize the social welfare maximizing options as “reasonable network management” and the social welfare reducing options as “unreasonable discrimination”. We also identify conditions under which the BSP’s network management choices deviate from the social optimum. These conditions help establish the criteria under which the social planner might wish to regulate the BSP’s actions.

Estimating Social Influences from Social Networking Sites—Articulated Friendships versus Communication Interactions

Despite the ubiquity of social networking sites, the online social networking industry is in search of effective marketing strategies to better profit from their established user base. Social media marketing strategies build on the premise that the social network of online users can be predicted and social influences among online users can be estimated. However, the existence of various heterogeneous social interactions on social networking sites presents a challenge for social network prediction and social influence estimation. In this article we draw upon the literatures on self-presentation on social networking sites and signaling in online social networking to categorize six heterogeneous online social interactions on social networking sites into two types—articulated friendships and communication interactions. This article provides empirical evidence for the differences between articulated friendships and communication interactions and the corresponding articulated and communication networks. In order to compare the impacts of the social influences based on these two networks, we utilize support vector machines to build a classifier to predict virtual community membership and we further estimate the marginal effects of these social influences using a two-stage probit least squares method. We find significant explanatory power of social influences in predicting virtual community membership. Although the communication network is much sparser than the articulated network, social influences based on the communication network achieve similar performance as the articulated network. These findings provide important implications for social media marketing as well as the management of virtual communities.

A Study of Enterprise Software Licensing Models

Abstract We study an enterprise software vendor’s decision on three prominent licensing models– on-premises, software as a service (SaaS), and hybrid. Our findings indicate that both the customers’ estimation of the future software quality improvement and network effects play critical roles in the software vendor’s choice of optimal licensing models. If the network effects are weak, the enterprise software vendor should choose the on-premises model when customers have a low estimation of the software quality improvement in the upgrade version. The hybrid model should be implemented if this estimation is in the mid-range, while the SaaS model generates the highest profit when customers believe that the upgrade version will have a significant improvement in software quality. As the network effects become stronger, the on-premises model will be dominated by the other two licensing models and is never optimal. In the event of a high upgrade cost and strong network effects, SaaS becomes the best licensing model due to its multitenancy nature.

Impact of Network Structure on Malware Propagation: A Growth Curve Perspective

Abstract Malicious software, commonly termed “malware,” continuously presents one of the top security concerns, and causes tremendous worldwide financial losses for organizations. In this paper, we propose a structural risk model to analyze malware propagation dynamics measured by a four-parameter (asymptote, point of inflection, rate, and infection proportion at inflection) growth curve. Using both social network data and technological network infrastructure from a large organization, we estimate the proposed structural risk model based on incident-specific nonlinear growth curves. This paper provides empirical evidence for the explanatory power of the structural characteristics of the underlying networks on malware propagation dynamics. This research provides useful findings for security managers in designing their malware defense strategies. We also simulate three common malware defense strategies (preselected immunization strategies, countermeasure dissemination strategies, and security awareness programs) based on the proposed structural risk model and show that they outperform existing strategies in terms of reducing the size of malware infection.

Open Source versus Proprietary Software: A Case of Fully Covered Market

This paper analyzes the impact of network externalities on the competition between open source software (OSS) and proprietary software (PS) in a fully covered market. The installed base and the profit of proprietary software are found increasing at the expense of decreasing user base for OSS. Furthermore, we find that a threshold corresponding to the quality ratio between OSS and proprietary software can be derived such that if the network effect intensity of the OSS is greater than that of the proprietary software multiplied by this threshold value, then OSS benefits from the presence of network externality; Finally, we find that making software products compatible with competing rival is not desirable by proprietary software vendors but favored by OSS venders.

Sponsored Data: Smarter Data Pricing in the Age of Data Cap

As the amount of online content explodes, consumers have to make a choice: either cut down their mobile data consumption or pay high overage fees. We investigate a recent phenomenon whereby network service providers are encouraging content providers to sponsor data for consumers. We analyze this phenomenon using game theory within a setting of one monopoly mobile network operator (MNO) and two competing content providers (CPs). Consumers are heterogeneous in both data usage and in their preference for the CPs. We find that the MNO’s optimal profit decreases as the consumers’ data cap becomes larger, and the optimal pricing scheme is a two-part tariff without any data caps.

Software Licensing in the Case of No Network Effects

Traditionally, consumers purchase software by paying the price upfront and install the software on their computers. However, allowing consumers “pay as you go” by subscribing to the software has become increasingly popular. The two licensing models are referred to as “on-premises model” and “Software as a Service (SaaS) model” respectively. This paper studies the software vendor’s choice of the two models considering consumers’ uncertainty on the software quality and the software upgrading issue.